Have you seen the recent State of Healthcare Finance Report, where Becker’s Hospital Review interviewed 52 CFOs from hospitals and health systems all over the country to understand what’s hot on their minds for 2014? Given a healthcare environment that’s as ever-changing as the recent Atlanta weather, the results paint a picture of uncertainty for hospitals of all sizes and systems; however, the CFOs are fairly unified in their concerns and goals this year.
I’d like to offer my thoughts on 3 important findings from the survey:
A vast majority of CFOs (75 percent) said reductions to Medicare reimbursement — through sequestration and other scheduled declines — worry them the most.
No matter how anticipated the scheduled deadlines, the Medicare reimbursement cuts to providers will still impact hospitals’ bottom lines. Coupled with an increase in high deductible health plans, this will shift even more financial responsibility to the patient; this is an issue hospitals already struggle with. CFOs must rise to the challenge of forgoing the predictability of reimbursement for the uncertainty of collecting from the patient. For this reason alone, the profitability of every hospital is now in the hands of the patient.
The bulk of CFOs (71 percent) said the challenge of transitioning to ICD-10 is, far and away, the most important revenue cycle issue for this year.
I think everyone agrees that the shift to ICD-10, while worthwhile in the long run, is bound to cause some headaches for CFOs this year. That each hospital will need to dedicate millions of dollars and hundreds of hours of billing staff time in preparation for the shift means, more than ever, providers cannot afford a lag in their revenue cycle leading into October. The report also mentions stabilizing cash collections as a parallel concern to ICD-10, with days of cash on hand being reported as the second most important financial metric behind operating margin. Regarding cash collection methods, I challenge every CFO to ask, “could you be doing more in-house with cloud based tools, could you be getting higher recoveries, and could you be saving money through the process?”
57 percent of CFO survey respondents still said managing labor costs has been the most difficult operational issue during the past year.
Has anyone else noticed how much the CFO, CIO, and COO roles have become intertwined in the past couple years? 2014 is probably the year the CFO will leverage data to increase operating margin and efficiency – because the financial survival of the hospital will depend on it. Automation as much as possible is the key; it’s the easiest, most cost effective and least risky way to accomplish these objectives. For example, if you are manually processing checks, electronic payments, refunds, payment plans, cash, etc and reconciling them without any type of automation, you are wasting employee time that could be spent managing your commercial payer payments.. The rising cost of ICD-10 conversions will cut into your employee’s resources of time; therefore, optimal employee allocation is a must.
The good news is that CFOs recognize these problems; after all, the report is a reflection of the issues they hope to address throughout 2014. 67% of CFOs reported that healthcare IT would be their largest capital expenditure of the year. Hopefully this indicates a progressive approach to an aging industry, one that will lead to exciting insights in both the clinical and operational realms around the patient and the community. Ultimately, those providers who have systems in place to help the patient will control healthcare. I’m looking forward to working with CFOs, vendors, and patients alike to continue making this goal a reality.